It has been about a month since the last earnings report for Modine (MOD Quick QuoteMOD - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Modine due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

Modine Q1 Earnings Beat Estimates

Modine reported adjusted earnings of $1.53 per share for the first quarter of fiscal 2027, up 44% year over year. The figure beat the Zacks Consensus Estimate of $1.27 by 20.47%.

Net sales increased 28% year over year to $874.1 million but missed the consensus estimate of $876 million by 0.17%. Data Centers sales surged 90%, while three consecutive quarters of record order intake pushed backlog to nearly twice the year-ago level.

Margins Face Supply Chain Pressure

Gross profit rose 10% year over year to $182 million. However, gross margin contracted 340 basis points to 20.8%, reflecting lower margins across all three operating segments.

Adjusted EBITDA increased 5% to $106.5 million, while the corresponding margin declined 270 basis points to 12.2%. Operating income slipped 1% to $74.8 million as higher gross profit was offset by increased expenses supporting growth and the planned Performance Technologies separation.

Data Centers Business Expands Rapidly

Data Centers revenues jumped to $348.6 million from $183.7 million a year earlier, primarily driven by higher sales to hyperscale customers in North America. Americas sales grew 112%, while EMEA sales advanced 18%.

The segment's adjusted EBITDA rose 27% to $51.7 million, though adjusted EBITDA margin fell to 14.8% from 22.1%. Supply shortages limited production and caused labor inefficiencies and weak overhead absorption. Management estimated that excess labor and under-absorbed overhead reduced the margin by 450-550 basis points.

Commercial HVAC Sales Rise 22%

Commercial HVAC sales increased 22% to $261.6 million. Growth reflected higher coil sales to data center customers and $19.7 million of incremental revenues from acquired businesses. Organic sales increased 6%.

Adjusted EBITDA advanced 7% to $41.6 million, while the margin declined to 15.9% from 18.1%. Profitability was affected by acquisition-related business mix, manufacturing consolidation inefficiencies and a greater proportion of lower-margin coil sales. Management expects the segment's margin to improve sequentially through fiscal 2027.

Performance Technologies Sales Fall

Performance Technologies revenues declined 3% to $277.8 million. Weak automotive and commercial vehicle demand more than offset higher sales to power-generation customers. Organic sales decreased 4%.

Adjusted EBITDA fell 3% to $36.2 million, while the margin edged down 10 basis points to 13%. Higher material and tariff costs pressured results, with contractual recoveries lagging cost increases. A $2 million reduction in selling, general and administrative expenses partly mitigated these headwinds.

Expenses Increase to Support Growth

Selling, general and administrative expenses rose 22% to $103.3 million, driven by Data Centers investments, acquired Commercial HVAC operations, incentive compensation and separation-related spending. As a percentage of sales, however, SG&A expenses decreased to 11.8%.

The quarter included $3.9 million of restructuring expenses and $7.1 million of costs tied to the planned Performance Technologies spin-off and merger with Gentherm. The transaction remained on schedule for completion in the fourth quarter of calendar 2026, subject to approvals and closing conditions.

Cash Flow Reflects Capacity Spending

Net cash provided by operating activities increased to $41.4 million from $27.7 million. Free cash flow was negative $5 million compared with positive $0.2 million a year earlier, mainly because capital expenditures rose to $46.4 million as the company expanded Data Centers production capacity.

MOD ended the quarter with $95.3 million in cash and cash equivalents and total debt of $528.2 million. Net debt increased to $432.9 million from $362.8 million at the end of fiscal 2026, largely due to treasury-stock purchases associated with employee equity awards.

Fiscal 2027 Outlook

Modine maintained its fiscal 2027 guidance for net sales growth of 20-35% and adjusted EBITDA of $650-$680 million. The outlook includes Performance Technologies for the full fiscal year and implies adjusted EBITDA growth exceeding 40%.

Data Centers sales are projected to increase 60-80%, while Commercial HVAC revenues are expected to grow 5-10%. Management expects companywide margins to improve sequentially, including a 200-250-basis-point increase in the second quarter, as component availability, production throughput and cost recovery improve.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -17.18% due to these changes.

VGM Scores

Currently, Modine has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Modine has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Modine belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Mobileye Global (MBLY Quick QuoteMBLY - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Mobileye reported revenues of $508 million in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $0.19 for the same period compares with $0.13 a year ago.

For the current quarter, Mobileye is expected to post earnings of $0.10 per share, indicating a change of +11.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +125% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Mobileye. Also, the stock has a VGM Score of A.